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Subject Author Date
does payment of health insurance premium by company = employee compensation Travis 11-10-2006
Posted by Travis on November 10, 2006, 2:02 am
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 I am joining a startup that included coverage of my
healthcare costs as part of my offer. Due to the startup
nature of the company, I doubt there is a formal benefits
plan in place. I have an individual health insurance policy
that I will likely keep until a formal benefits plan is
operating that includes company health insurance.

Questions:
1) can the company pay my individual insurance premiums, and

2) if so, for tax purposes, is it considered employee
compensation or can it be considered a reimburseable business
expense?

Thanks in advance for your advise.

Travis

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Posted by Herb Smith on November 10, 2006, 5:10 pm
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 Travis wrote:

> I am joining a startup that included coverage of my
> healthcare costs as part of my offer. Due to the startup
> nature of the company, I doubt there is a formal benefits
> plan in place. I have an individual health insurance policy
> that I will likely keep until a formal benefits plan is
> operating that includes company health insurance.
>
> Questions:
> 1) can the company pay my individual insurance premiums, and

Yes

> 2) if so, for tax purposes, is it considered employee
> compensation or can it be considered a reimburseable business
> expense?

Employee compensation

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by ed on November 10, 2006, 5:10 pm
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Travis wrote:

> I am joining a startup that included coverage of my
> healthcare costs as part of my offer. Due to the startup
> nature of the company, I doubt there is a formal benefits
> plan in place. I have an individual health insurance policy
> that I will likely keep until a formal benefits plan is
> operating that includes company health insurance.
>
> Questions:
> 1) can the company pay my individual insurance premiums, and

Yes the company can pay anything for you. It is either
deductible to them and not taxable to you (as a tax
deductible benefit), or it is not deductible to them and
taxable to you (as wages).

> 2) if so, for tax purposes, is it considered employee
> compensation or can it be considered a reimburseable business
> expense?

Paying your health insurance is NOT considered employee
compensation, it is a tax-free health insurance benefit to
you and therefor deductible by the corporation.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by TRB on November 10, 2006, 5:29 pm
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> I am joining a startup that included coverage of my
> healthcare costs as part of my offer. Due to the startup
> nature of the company, I doubt there is a formal benefits
> plan in place. I have an individual health insurance policy
> that I will likely keep until a formal benefits plan is
> operating that includes company health insurance.
>
> Questions:
> 1) can the company pay my individual insurance premiums, and
>
> 2) if so, for tax purposes, is it considered employee
> compensation or can it be considered a reimburseable business
> expense?

I located the answer to my own question in IRS publication
15 - "Employer's Tax Guide". As per pub 15: "If you pay the
cost of an accident or health insurance plan for your
employees, that may include an employee's spouse and
dependents, your payments are not wages and are not subject
to social security, Medicare, and FUTA taxes, or federal
income tax withholding."

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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